Costco (COST) is getting banged around today as investors were unnerved at its fiscal fourth-quarter profit warning. The main reason for the warning was its failure to raise prices enough to keep up with escalating costs. The company kept prices in check in order to gain cash-strapped customers, but the strategy didn’t work as well as it would have liked.
The interesting thing is that sales growth is strong, but it isn’t translating into bottom line gains. Same-store sales grew 8% through June, which was much higher than the industry average. One thing for sure is that investors have soured on the stock and these things take a long time to “de-sour” in the words of Jerry Seinfeld.
